Innovation needed to boost economy

UP IN ARMS: Sir Paul Callaghan told the Labour Party conference he wants New Zealand to build on creative genius.

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Top scientist Sir Paul Callaghan says New Zealand is a poor nation because we work at low-wage activities.

"We have the capacity to be prosperous, but we choose not to be," the New Zealander of the Year said in a speech to the Labour Party congress yesterday.

Thursday's budget has been criticised for its lack of a coherent plan for economic growth, when Callaghan said New Zealanders were looking for a vision "about where we can go as a country".

There was a disparity between rich and poor compared with other developed countries, productivity was near the bottom of the OECD despite Kiwis working longer than those in other developed countries, and we were failing to capitalise on a school system that performed highly in international comparisons.

Callaghan challenged Prime Minister John Key's emphasis on tourism as a means of boosting wealth, saying to meet National's goal of catching Australia, businesses would have to produce an extra $40 billion in exports.

"Instead of 1000 people visiting Milford Sound every week, we'd need 60,000," he said, and even then New Zealand would remain behind because tourism created only $80,000 in revenue per job annually.

He compared that with Fonterra, which created $350,000 per job annually, or US-based Apple computers, which produced $1m-plus per job.

"The more tourism, the poorer we get. Tourism is a great industry, but it cannot be a route to prosperity."

There were innovative companies that collectively earned New Zealand around $4 billion a year in exports. To create an extra $40b in revenue, New Zealand only needed to foster another 100 of those. That requires entrepreneurial genius.

But the most important thing was creating an environment they wanted to live in, because creative genius was mobile. "Creative people don't want to live in gated communities with poverty on their doorstep."

Labour leader Phil Goff told the conference he was ready to unveil a boost for research, science and skills training, and that an end to an existing government programme would fund it. He said the increase would build on Callaghan's call for more spending on innovation.

He said asset sales and KiwiSaver cuts made New Zealand's debt problem worse, with the deficit expected to peak at a record $16.7b this year before falling to $9.7b next year.

Deputy leader Annette King told the 500 delegates she had dropped plans to announce a major plank in the party's children's policy because a few days after the Budget was not the right time. However, she said Labour would scrap the Families Commission and fold some of its work into a new Children's Ministry.

King said the commission had a budget of $7.7m compared with $4.5m for Women's Affairs. She said it was astounding there was a minister for racehorses, rugby and senior citizens, but not for "the most vulnerable in our community."